Stores shortage: bin card, ledger and physical count
In the central store of Government Medical College, Jammu, item 'X' is used for office use. Opening stock on 1 April is 100 units at ₹40. Purchases: 200 units at ₹45 on 10 April and 200 units at ₹50 on 20 April. Issues: 150 units on 15 April and 200 units on 25 April. The bin card shows a closing balance of 150 units; the stores ledger shows 140 units; the physical verification on 30 April found 135 units. The storekeeper says 10 units were issued to a department without a requisition slip and 5 units were damaged in handling. He wants to write off the entire difference as 'normal shortage' and adjust the ledger to match the bin card.
1. Compute the value of issues on FIFO basis and the closing stock value before shortage adjustment.
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FIFO issue value:
- 15 April: 150 units = 100 × ₹40 + 50 × ₹45 = ₹4,000 + ₹2,250 = ₹6,250.
- 25 April: 200 units = 150 × ₹45 + 50 × ₹50 = ₹6,750 + ₹2,500 = ₹9,250.
Total issue value = ₹6,250 + ₹9,250 = ₹15,500.
Closing stock before shortage = 100 + 200 + 200 − 350 = 150 units, all from the 20 April lot at ₹50 = ₹7,500.
2. Analyse the three figures (bin card 150, ledger 140, physical 135). What does each discrepancy suggest and what should be investigated?
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The three figures are internally consistent with the storekeeper's statement, but not with a simple 'normal shortage' write-off:
- Bin card vs physical: bin card is higher by 15 units. The 10 units issued without requisition explain part of this if they were entered in the ledger but not in the bin card. The remaining 5 are the damaged units.
- Ledger vs physical: ledger is higher by 5 units, matching the 5 damaged units not yet written off.
- Bin card vs ledger: bin card is higher by 10 units, matching the unrecorded issue in the bin card.
Investigate the receiving department, the requisition register, the bin card postings and the damage report. Do not accept the storekeeper's statement without documentary evidence.
3. How should the shortage be treated in the stores ledger and what controls should be recommended?
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Do not write off the whole difference as normal shortage.
- Regularise the 10 units by obtaining a requisition slip and charging the issue to the department. If the issue was unauthorised, fix responsibility and recover the cost.
- For the 5 damaged units, prepare a survey or condemnation report, obtain sanction, and write off only the approved amount.
- Adjust the stores ledger to the approved physical balance; the bin card should record actual issues and damages.
- Controls: pre-numbered requisition slips, immediate posting to both bin card and ledger, monthly reconciliation, surprise physical verification, and separation of custody from record-keeping.